What's new in production

	Vol. 226 No. 7
ROBERT E. SNYDER, EXECUTIVE ENGINEERING EDITOR

China moving into Canada. It sounds like a logistically hard way to get hydrocarbon energy into China to supplement its rapidly growing needs. However, Lehman Bothers reports that a second investment by China in Canada’s vast oil sands resource base was recently announced by Sinopec, which has agreed to acquire a 40% interest in the Northern Lights oil sands mining project for some C$105 million. Lehman believes the key to this agreement is that, as Canadian oil sands production continues to grow, China will be a new market to help support prices, as it has indicated that it is looking toward Canadian oil sands production to help support its own energy needs. The analyst estimates that Canadian oil sands production can more than triple to about 3.5 MMbpd over the next 10 years.

In April, another Chinese oil company, Chinese National Offshore Oil Corp. (CNOOC) purchased a 16.69% direct ownership interest in oil sands producer MEG Energy for C$150 million. Also in April, Petro-China signed a memorandum of understanding with Enbridge to potentially secure half of the planned oil sands production expected to be shipped to the west coast of British Columbia via the proposed 400 Mbpd Gateway pipeline. The line is expected to cost C$2.5 billion and be completed in late 2009/2010. The logistics don’t seem so challenging when the oil sands production reaches the Canadian West Coast.

Actually this is just another example of China’s aggressive approach to investing in the oil business in many world areas, South America for one. And it is only the beginning, Canadians are reportedly seeing more than one onshore Chinese rig and crews moving into the Canadian Rocky Mountain area.

More offshore rig building. It has been a while, but a few yards are reportedly turning out some rigs to supplement the “growing older” rig fleet, and move into new international markets. Maersk has ordered two deepwater semis from Keppel FELS in Singapore for delivery in 2008 and 2009. The DSS 21 design by Keppel and Marine Structure Consultants will operate in 3,000-m water, accommodating up to 180 persons.

Keppel is also building four jackups for Maersk. Regarding jackups, William Herbert, with Simmons & Company noted in a recent Houston Chronicle interview that close to 95% of the world fleet of 400 jackups are working, and between 30 and 35 are being built – six months ago that number was less than 15. Its great to see those yards busy again – $50 oil does have its effects on the drilling business.

Arlene gets operator’s attention. Following last month’s editorial on hurricanes, highlighting 2004’s Ivan, we find ourselves entering another hurricane season in the Gulf of Mexico, as introduced by tropical storm Arlene, which passed through the US Gulf on June 10, with heavy rain, but no serious damage anywhere. The storm, however, caused the evacuation of 36 platforms and 16 rigs off the Houma and New Orleans, Louisiana, coast.

The cumulative shut-in oil and gas production for the period June 10 to 14, as reported by the MMS was 574,747 bbl oil and 3.428 Bcf gas. While these figures represent the equivalent of only 0.109% and 0.087%, respectively of the Gulf’s annual oil/gas production, the present worth value of this shut-in production at $50/bbl and $6/Mcf represents over $49 million, plus the costs of evacuations and facility restarting. In the wake of Ivan, 31 platforms were seriously damaged, several were destroyed, and more than 10% of the US Gulf’s production was interrupted for at least four months. Talk about present worth loss!

Realizing the vulnerability of offshore facilities and pipelines to hurricanes, the MMS has awarded six contracts totaling over $600,000 for studies of the impact of Hurricane Ivan on the offshore oil and gas structures of the Gulf of Mexico. These will analyze and assess the consequential damage to structures and pipelines, determine the effectiveness of existing design standards and pollution-prevention systems and develop recommendations for changes to industry standards and MMS regulations, if needed.

Awards granted went to: 1) Texas A&M University, Offshore Technology Research Center, “Assessment of drilling/ workover rig storm sea fastenings;” 2) Offshore Risk & Technology Consulting, Inc., “Examination/ review of MODU loss of stationkeeping ability;” 3) Det Norske Veritas, “Pipeline damage assessment,” 4) Energo Engineering, Inc., “Assessment of fixed offshore platform performance;” 5) Texas A&M University, Offshore Technology Research Center, “Mudflows and mudslides during Ivan;” and 6) William Lettis & Associates, Inc., “Hazard susceptibility mapping of submarine mudslides.”

That’s one big hammer. BJ Tubular Services announced that it completed a complex hammer conductor-driving operation on an ultra-deep well for a major operator in the Gulf of Mexico’s continental shelf. The well which will have a TD of about 32,000 ft, is located in a new development in South Timbalier 168. The project is part of BJ’s ongoing efforts to strengthen its position in the Gulf, and expand its hammer services into the ultra deep wells on the shallower water continental shelf.

Prior to the arrival of the Scooter Yeargain jack-up drilling rig, BJ commenced the conductor-driving operation by working from lift boats in over 70-ft water. It successfully drove a 72-in. custom-welded conductor with a 2.5-in. wall thickness to 376 ft below the mud line, which required penetrating a thick layer of sand measuring 140 ft. For the job, it mobilized a hammer services crew of 22, including a supervisor, technicians and welders from its base in Broussard, Louisiana.

By using the BJ-200 Hydrohammer, the state-of-the-art hydraulic pile-driving system with a capacity of 147,500 ft-lb achieved a maximum of 479 blows per foot at 147 kips. Additional custom equipment for the operation included a specially fabricated Horvath drive shoe to enhance the driving process. And to assist in reaching maximum penetration, a special sling package and drill pipe tongs were supplied to run drill pipe inside the conductor for jetting purposes.

Following successful installation of the 72-in. conductor, BJ attached the fabricated pile clamp and steel stabbing guides so that two 36-in. batter piles could be installed to provide further support for the conductor. These were driven to 188-ft with an S-90 hammer.